There is no surprise in the findings of the strategic review of the national broadband network: it will cost a lot more and take a lot longer to build than Stephen Conroy and Mike Quigley promised. The surprise is that Malcolm Turnbull's version of the NBN will also take longer and cost more than he envisaged.
It was well understood that Conroy's NBN, already way behind schedule, would have little chance of achieving anything remotely close to its original corporate plan, under which the rollout would be completed by 2021 with a peak funding requirement of $44 billion.
According to the findings of the review, three years into the rollout it is already two years behind schedule, would be completed three years late and, on its current model and trajectory, would have a peak funding requirement of $72.6 billion.
The review (which included external advice from Boston Consulting, KordaMentha and Deloitte) concluded that without change, NBN Co would not deliver a return on capital, let alone the 7.1 per cent return that Conroy has consistently insisted would be achieved (and which was necessary to keep the project costs off-budget).
NBN Co would have had to significantly increase user charges – the review says by 50 per cent to 80 per cent across the board – to deliver its promised return.
The nub of the rollout's failure was continued overly optimistic assumptions on costs and revenues, even when the evidence to the contrary mounted. The review was less than complimentary about NBN Co's culture, which it said was ''corrosive of performance'', and the lack of expertise relevant to an infrastructure of the NBN's scale.
In a sense, the findings of the review confirm what many had suspected from the moment Kevin Rudd and Stephen Conroy announced their fibre-to-the-premises NBN.
It's also not a surprise that using a mix of technologies – including fibre-to-the-node that will incorporate Telstra's copper connections to premises – would be significantly cheaper, albeit slower.
However, it won't be as cheap nor will be built as quickly as Turnbull had originally envisaged.
In peak funding terms, it will cost $41 billion rather than the $29.5 billion in Turnbull's policy document and be completed in 2020 rather than 2016. Still, that's $32 billion cheaper and four years earlier than the current NBN.
The conclusion that a multi-technology mix is the best way to deliver higher speed broadband – more than 50 Mbps by 2019 to more than 90 per cent of premises – is a logical and compelling one.
The review also agrees with Turnbull's previously stated view that it would be cheaper to upgrade to an all-fibre network in future than to roll out an all-fibre NBN today. Given that most premises would have no need or desire to pay for 100 Mbps-plus speeds today, gold-plating the network by spending an additional $32 billion would be profligate in the extreme.
The review isn't a business case, nor a cost-benefit analysis. Those will apparently follow in due course. Its findings ring true because they do conform to the basic logic that using existing infrastructure rather than over-building it or arbitrarily making it redundant (and paying through the nose to do that) will reduce the costs.
There will still be a lot of fibre in the network 0 20 to 26 per cent of the network will be fibre-to-the-premises – but fibre-to-the-node (44 per cent to 50 per cent) and the (upgraded) HFC networks (30 per cent) will play central roles in the network.
As they should – particularly the HFC networks. The review says they could provide high-speed broadband to about 3.4 million premises by adapting and extending the networks.
Conroy's plan saw those perfectly useable networks ordered redundant, with taxpayers writing very large cheques to Telstra and Optus for that absurdity.
There is clearly a lot of work still be undertaken to turn Turnbull's NBN into a reality, not the least of which will be a complex renegotiation of agreements with Telstra and Optus and existing NBN contractors.
Turnbull and NBN Co chairman Ziggy Switkowski were adamant that the assumptions on which the review reached its conclusions were conservative; an assertion for which a doubling of NBN Co's contingency reserve to 20 per cent provides some support.
The credibility of the review (and Turnbull) will rest on how NBN Co executes the shift to the new strategy and its delivery.